The stock market is usually LOOKING FORWARD by several months. It is never a good indicator of current economy. Since only God knows for sure where economy will be 6-9 months from now, the stock prices are simply best guess by human beings as to what is coming.
Right now, there are 4 negatives/worries for the market.
1. Interest rates are going up, which is a lagging
indicator, and confirms good economic conditions at the
present.
2. China trade deal is a huge unknown.
3. Market was seriously overvalued before recent decline.
Believe it or not it is still overvalued based on
average inflation-adjusted earnings from the previous
10 years. But the market can fluctuate a lot from the
10 year average.
4. Debt is high everywhere, especially in Asia.
No, stocks are not undervalued at all based on typical market conditions. Stocks are undervalued based on LT market adjusted returns at this age point in cycle based on a normal cycle! Which is to say..